US embassy cable - 05KINGSTON1472

UNCLAS SECTION 01 OF 02 KINGSTON 001472 
 
SIPDIS 
 
STATE FOR WHA/CAR (WBENT), EB/CIP/BA (COOPER, BOEHME) 
 
E.O. 12958:  NA 
TAGS: ECON, EFIN, JM, TIP 
SUBJECT: MEETING WITH PAULWELL - NO GUARANTEE OF ACTION IN 
JAMAICAN TELECOM CRISIS 
 
REF: A) Salzman/Cooper June 3 E-mail 
 
B) Powell/Boehme June 6 E-mail 
C) KINGSTON 1444 
 
1. (U) This is an action request.  See Paragraph 14. 
 
2. (SBU) Summary:  On June 6, Charge and Econoff met with 
Commerce Minister Paulwell to discuss the ongoing blocking 
of telecommunications circuits by Jamaican carriers. 
Emboffs communicated USG concern about the tactic of 
blocking and informed the GOJ officials of the nature of 
the potential FCC response, which could include a "Stop 
Payment" order making it illegal for U.S. carriers to send 
payments to their Jamaican counterparts until the 
situation is resolved.  GOJ officials denied media reports 
that they had ordered the Jamaican carriers to block 
incoming signals, but subsequent information provided by 
the Canadian High Commision indicated that the mandate for 
the signal block originated directly from the Minister of 
Commerce. End Summary. 
 
3. (U) On June 6, Charge and Econoff met with Philip 
Paulwell, Minister of Commerce, Science and Technology 
(with Energy) (MCSTE).  Paulwell was accompanied by 
Ambassador Peter King, Director of the Jamaica Trade Board 
and senior advisor to Paulwell; Jean Dixon, Permanent 
Secretary of MCSTE; Colin Campbell, Chairman of the 
 
SIPDIS 
Universal Service Fund Company; and Allison Stone, Foreign 
Trade Specialist at the Ministry of Foreign Affairs and 
Foreign Trade. 
 
4. (SBU) Charge began by stating that the USG remained 
concerned about the tactics being used by the Jamaican 
telecom operators in their negotiations with the 
international carriers over the new levy, especially the 
practice of blocking incoming calls.  He said that he had 
read that Sprint had agreed to pay the levy, and that 
there were reports that the other carriers would soon 
follow suit. 
 
5. (SBU) Paulwell confirmed that Sprint had signed, and 
said that AT&T was, that same morning, holding a 
conference call with Cable & Wireless to try to work out 
an agreement.  He further stated that MCI had raised its 
rates to Jamaica effective June 9, which the MCSTE saw as 
a move in preparation for signing the levy agreement. 
Paulwell said that full services to Jamaica should have 
been restored by June 4, as Sprint's network provides 
sufficient capacity to carry the normal volume of call 
traffic, even with AT&T and MCI still blocked. 
 
6. (SBU) Paulwell then reviewed the history of the 
Universal Service levy program.  He said he had started 
his negotiations with Jamaican service providers in early 
2004, and spent months in discussions with Cable & 
Wireless, Digicel and MiPhone - each of which he described 
as "resistant" to the idea of introducing the levy.  His 
discussions only included the local carriers.  Paulwell 
said that it was the responsibility of the local carriers 
to inform their international partners of the new fees, 
and to work out a payment plan.  He said that the standard 
timeframe for notification of the international carriers 
is 30 days, though some carriers received as much as 70 
days notice. 
 
7. (SBU) Econoff thanked Ambassador King for his 
clarification, over the weekend, that the 40-day grace 
period prior to the imposition of circuit blocking 
measures, applied only to Jamaican companies, and not to 
international carriers (ref B).  Econoff then proceeded to 
clarify that the USG was not attempting to stop the levy, 
protest the Universal Service program, or intervene to set 
a specific termination rate in Jamaica.  Rather, the 
primary concern of the USG was the tactic of circuit 
blocking. 
 
8. (SBU) Econoff delivered the following talking points: 
 
-- The USG considers the rate negotiations to be a 
commercial issue to be settled between the carriers, but 
the blockage of circuits is an unacceptable tool in the 
negotiation process, with broader negative economic 
impacts. 
 
-- The USG considers circuit blockage to be an abuse of 
market power that may trigger the FCC's enforcement 
mechanism. 
 
-- Industry representatives have been in discussions at 
the highest levels with the FCC regarding the potential 
"Stop Payment" option, wherein the FCC can make it illegal 
for U.S. carriers to pay the Jamaican carriers until the 
situation is resolved. 
 
-- The USG calls upon the Government of Jamaica to use its 
influence to convince the Jamaican carriers to cease the 
tactic of signal blocking. 
 
9. (SBU) Campbell defended the hard bargaining tactics of 
the Jamaican carriers, contending that the Jamaican 
carriers had dropped their termination rates to two cents 
per minute from over USD 1 per minute in the belief that 
the savings would be passed to consumers.  According to 
Campbell, the international carriers retained per-minute 
rates from the U.S. market at the same levels and pocketed 
the difference as profit. 
10. (SBU) Econoff reiterated the USG position that the 
final arrangement of the pricing schedule is a private- 
sector commercial matter to be resolved between the 
carriers, but that the tactic of circuit blocking is an 
abuse of market power that could, if deemed warranted by 
the FCC, result in a "Stop Payment" order.  Econoff 
further inquired as to the veracity of media statements 
wherein Jamaican carriers stated that they would lose 
their license if they did not block the incoming calls. 
 
11. (SBU) Paulwell denied that this was the case.  He 
maintained that the local carriers were responsible for 
paying the levy, but that how they sourced the money was 
entirely up to them.  The tactic of blocking incoming 
calls was, according to Paulwell, a decision of the 
Jamaican carriers. 
 
12. (SBU) Note: Following the morning meeting with 
Paulwell, Canadian Deputy High Commissioner Bryan Burton 
shared with Econoff a communique that refers to a letter 
to Ms. Camille Facey of Cable & Wireless Jamaica Ltd. from 
Minister Paulwell dated June 1, 2005.  In the letter, 
Paulwell informed Facey that "carriers who fail to secure 
rate changes before June 1, 2005 will be forced to block 
the international circuits, pending agreement of new 
rates, in order to ensure that their licenses are not 
placed at risk."  On that evidence, Minister Paulwell was 
untruthful regarding the GOJ's involvement in the 
implementation of blocking. End Note. 
 
13. (SBU) Comment and Action Request:  The Jamaican 
delegation was initially somewhat defensive, and kept 
focusing on their right to implement the levy as they saw 
fit.  They became more amenable after we clarified that 
the primary issue at hand was the tactic of blocking, not 
the levy itself.  Post now believes that the GOJ 
understands the concerns of the USG.  However, given 
Paulwell's apparent disingenuousness regarding his 
involvement in the implementation of the circuit blockage, 
and the GOJ's obvious pride in the capitulation of Sprint 
(which, they stated, has sufficient capacity to restore 
near-normal levels of service), the GOJ is unlikely to 
take action on this issue absent additional pressure.  As 
of June 8, MCI and AT&T have signed agreements, allowing 
the Universal Service levy to be funded by the 
international carriers and removing the need for the 
circuit blockage. 
 
14. (SBU) Comment and Action Request (cont'd): The recent 
release of the Department's 2004 Trafficking in Persons 
(TIP) report (ref C) downgrading Jamaica to Tier 3 is 
still reverberating here, and many in the GOJ have taken 
umbrage at the news.  Though TIP is completely unrelated 
to the telecommunications dispute, it may inadvertently 
have strengthened Paulwell's hand in the Cabinet, as he 
has been able to "stand up to the Americans."  Post 
requests that the Department provide instructions on 
further actions concerning this issue, now that the levy 
payment agreements have been signed by the international 
carriers. End Comment. 
 
ROBINSON